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Consumer Confidence Remains Robust: 2 Funds in Focus


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A robust labor market, steadily rising wages and strong household finances resulted in a surge in consumer spending last quarter. Meanwhile, consumer confidence hit an 18-year high in October. However, the metric declined in November. Despite such a decline, the index remains at an appreciably high level.

Further, consumers are confident that economic expansion will continue in 2019. Also, the confidence in the job market remains robust, as unemployment lingers near a 50-year low.

Meanwhile, experts believe that the coming holiday season is expected to be a record-breaking event. Under such encouraging conditions, it makes buying mutual funds that invest in leisure, discretionary and transportation companies prudent.

Robust Labor Market Keeps Consumer Confidence High

U.S. consumer confidence declined from its 18-year high in November, per the Conference Board, a business research organization. The consumer confidence index decreased to 135.7 from 137.9 in October. However, the metric surpassed the consensus estimate of 135.4.

Nonetheless, the key economic indicator that measures attitude on economic prospects remained healthy. Also, consumer spending increased steadily at a 4% annual pace from July to September, the fastest since late 2014.

Robust consumer spending is in turn fueled by a strong labor market. Currently, the unemployment rate is near a 50-year low of 3.7%. This is exactly why the number of respondents, who believe jobs are "plentiful" increased from 45.4% to 46.6%, the largest share since January 2001.

Record-Breaking Holiday Season Ahead

Per a report published on Nov 5 by leading market research firm eMarketer, Americans are likely to spend more than $1 trillion this holiday season. The report states that consumers in the United States would spend approximately $1.002 trillion from Nov 1 through Dec 31.

Further, the report estimates that e-commerce sales would surge 16.6% to $123.73 billion, representing about 12.3% of the total retail sales this holiday season and would be the primary catalyst for growth in retail sales. Notably, brick-and-mortar retailers still eat up approximately 87.7% of the pie.

Meanwhile, traditional retailers are continuously trying to up their game. Retail giant Target has already released its Black Friday ad for 2018. Online retailers are not far behind in the game. Amazon announced on Nov 5 that all its members from the United States and not only Prime members would be eligible for free shipping this holiday season.

2 Best Funds to Buy Now

Given such circumstances, we have highlighted two mutual funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) that are poised to gain from such factors. Moreover, these funds have encouraging three and five-year returns. Additionally, the minimum initial investment is within $5000.

We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but also on the likely future success of the fund.

The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more:  Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money ).

Fidelity Select Consumer Discretionary Portfolio Fund FSCPX invests in large-blend companies. The objective of FSCPX is to seek capital appreciation. FSCPX normally invests at least 80% of its assets in common stocks of companies principally engaged in the manufacture and distribution of goods and services to both domestic and international consumers.

This Sector - Other product has a history of positive total returns for over 10 years. Specifically, the fund's returns over the three and five-year benchmarks are 9.3% and 10.7%, respectively. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds,  please click here

The Fidelity Select Consumer Discretionary Portfolio Fund, managed by Fidelity, carries an expense ratio of 0.77%.  Moreover, FSCPX requires a minimal initial investment of $2,500.

FSCPX's performance, as of the last filing, when compared to funds in its category was in the top 10% over the past three years and in the 7% over the past five years.

Fidelity Select Leisure Fund  FDLSX seeks capital appreciation. FDLSX normally invests at least 80% of its assets in common stocks of companies principally engaged in the design, production, or distribution of goods or services in the leisure industries. The fund offers dividends and capital gains twice a year in April and December.

This Sector - Other product has a history of positive total returns for over 10 years. Specifically, the fund has returned 8.1% over the three-year and 9.4% over the five-year benchmarks. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds,  please click here

The Fidelity Select Leisure Fund, managed by Fidelity, carries an expense ratio of 0.77%.  Moreover, FDLSX requires a minimal initial investment of $2,500.

FDLSX's performance, as of the last filing, when compared to funds in its category was in the top 16% over the past three years and in the 8% over the past five years.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Investing , Mutual Funds
Referenced Symbols: FSCPX , FDLSX



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